Marvell and ex-COO pay fines over backdating charges

Marvell Technology Group and Weili Dai, its former chief operating officer agreed to pay fines of $10 million and $500,000, respectively, related to charges by the SEC the the company reported false financial information to investors by improperly backdating stock option grants to employees. The parties settled the matter with the SEC “without admitting or denying the allegations.”

“According to the SEC’s complaint, filed in federal district court in San Jose, “the scheme allowed Marvell to overstate its income by $362 million from its fiscal years 2000 through 2006. The SEC alleges that Dai, acting as Marvell’s ‘Stock Option Committee,’ routinely reviewed lists of Marvell’s historical stock prices and picked the date with the lowest (or one of the lowest) stock prices since the previous grant date. This date would then be communicated to Marvell personnel as the date on which the Stock Option Committee had purportedly met and authorized the option grant. To make it appear that Marvell had actually granted the options on that date, Dai signed falsified minutes attesting to a meeting of the Committee on that earlier date.”

Dai, who is married to Marvel’s chief executive, will have to dig into savings to pay the
fine, as her pay at the company was reduced to $1 from $220,000 back in January, along with the pay for her husband, Sehat Sutardja, and his brother, Pantas Sutardja, who is Marvell’s chief technology officer.

We’ve previously posted about Marvell’s layoffs announced a month before Christmas and then the pay boost for its CEO that followed little more than a month later, and about the subsequent pay cuts two weeks later.

Shares of Marvell, a semiconductor company based in the Bermudas that operates out of Santa Clara, rose by 24 cents, or 1.8 percent, to $13.18 in afternoon trading.